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Student Debt Forgiveness Program Offers False Hope

Student Debt Forgiveness Program Offers False Hope

In 2007, Congress created a program that offered student debt forgiveness to public workers like teachers, librarians, soldiers, and nurses.

To qualify for debt forgiveness, applicants had to work for a government entity or nonprofit and make on-time monthly payments for 10 years. And they had to secure loans directly from the federal government (not from federally-guaranteed third parties).

In many cases, people planned their careers based on the assumption they would receive debt forgiveness in 10 years. 

The first participants to sign up for the program became eligible for debt forgiveness this year, and nearly all of them have been turned away. 

So far, less than 900 of the more than 75,000 applications for debt forgiveness have been approved. Roughly 25% were denied based on missing information in applications and 16% were turned away because they had the wrong type of repayment plan. 

Some people were rejected because their monthly payments were short by less than $1.

“It’s deeply frustrating, because you know you’re done, and you’ve jumped through all these hoops,” says Bonnie Svitavsky, who incurred $97,000 in student debt to obtain master’s degrees in library sciences and creative writing. Despite making her payments on time and working as a librarian for 10 years, her application for debt forgiveness was rejected. 

“Through rampant mismanagement at the Department of Education and rampant illegal practices at the student loan companies, it’s become a broken promise for millions of Americans,” says Seth Frotman, executive director of the Student Borrower Protection Center.

Key issues with the Public Service Loan Forgiveness program include:

  • The company that was hired to implement the program received no guidelines on how to do so
  • Loan services failed to tell applicants which financial-aid packages qualified 
  • The Department of Education failed to define which employers qualified as public service organizations 

In 2013, the Consumer Financial Protection Bureau found that student loan services delayed or denied applicants access to the program by failing to provide them with necessary information about the program’s requirements.

In an effort to solve the problem, Congress in 2018 allocated $700 million to help reimburse borrowers who were misled by loan providers.

So far, the program has helped a mere 442 people decrease their student debt. 

In its 2020 budget, the Trump Administration has proposed replacing the Public Service Loan Forgiveness program with an income-driven repayment plan that would increase monthly payments and extend the time borrowers would need to wait before applying for debt forgiveness.

In response, a group of Democratic Senators including Elizabeth Warren and Bernie Sanders introduced a bill that would make all federal loans and repayment plans eligible for debt forgiveness and decrease the time borrowers would need to wait to get relief on their loans.

Advocates say the program would encourage more people to go into public service work, but opponents worry the bill could add more than $10 million to the program’s budget over the next 10 years.

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  1. madmemere

    Here “was” another great plan to help people achieve their greatest potential and, as typical of most government operations- -a plan developed by great minds, who didn’t think through the entire process and then the program is managed and destroyed by idiots. Too bad the right hand never takes the time to find out what the left hand is doing.

  2. Big Z

    Has the US Government committed fraud? Have colleges and universities remained silent while students signed up for classes, knowing tuitions will be paid but forgiveness of crippling student debt will be unlikely? This problem goes way back, but the effects beginning now and lasting into the future of swindled students facing the reality of never being free of the student loan debt, and government facing a wholesale non-repayment crisis will soon reach critical mass. And will a bankrupted Social Security disaster follow all too closely?


    This is WAY too complicated for government work. The government tends to bid against itself causing prices to rise and ends with more administrative backend people than front line people, in this case, teachers. If only the 80% least expensive schools could get student loans, the schools would cut costs to be in that 80%. But, as long as loans are set to full cost, the government will support ANY increase.

  4. Beachbum

    Why should taxpayers foot the bill for peoples individuals choices….they racked up the loans and did not give it a thought….How about giving the money back to individuals that actually went to work after graduation and paid off their student loans!!!